Ukraine’s Finance Ministry raised UAH 206 mln at its weekly local bond auction held on July 3 after UAH 957 mln raised last week. All auction receipts were drawn from the placement of 3Y bonds to two bidders at 16.15%, rejecting a third bidder who wanted to buy the 3Y bond at 16.40%.

MinFin also offered 1.5Y and 2Y bonds, which also did not find much demand. Three bidders were ready to buy the 1.5Y bonds at 16.50% and one bidder wanted the 2Y bonds at 16.45%. The government rejected those bids, apparently finding the interest rates too high.

Evgeniya Akhtyrko: The market is not ready to accept the government’s attempts to lower the interest rates for UAH-denominated local bonds with maturities exceeding six months. And this situation is not likely to change until the next IMF loan tranche is finally secured.

Therefore, we expect the government borrowing will involve mostly 3M and 6M UAH-denominated bonds and local Eurobonds at its upcoming weekly auctions.